Kinross Satellite Fields to Enhance Fort Knox Production.

• Author: JONES, PATRICIA
• Position: Kinross Gold Corp., Fort Knox gold mine

More jobs. More gold. Kinross steps up exploration efforts around Fort Knox.

Since acquiring Fort Knox in a company merger two and one-half years ago, Toronto-based Kinross Gold Corp. has been looking for supplemental ore to run through Alaska's largest hard-rock gold mine and mill complex.

Located about 20 miles northeast of Fairbanks, Fort Knox is surrounded by a number of promising gold lode properties in various stages of development. From raw land staked in recent years, such as the Juniper and Twin Buttes claim blocks several miles north of Fort Knox, to the shuttered Ryan Lode Mine on Ester Dome, there's plenty of work for area geologists.

Slowly but surely, Kinross has acquired most of the neighboring gold exploration properties that could conceivably serve as satellite mine sources for the mill complex that chums through more than 40,000 tons of ore a day.

With a daily production rate of about 1,000 ounces of gold, Fort Knox crews have already surpassed their first one million ounce mark, all from rock mined at Gilmore Dome.

Lower Grade Gold, Lower Prices

But the richest of the Fort Knox ore has mostly been mined. Cash costs to produce gold remain the same or increase with time, as the average gold grade begins to decline. Continued low gold prices also affect the mine's life, as some ore becomes uneconomical to process at today's market prices.

"They do need the sweetener from Gil or True North--a big improvement to the average grade to make it profitable," said Dick Swainbank, minerals expert in the Division of Trade and Development in Alaska's Department of Community and Economic Development.

"Obviously, gold prices of $275 anounce are far different than the $400 an ounce (Fort Knox) was predicated on," he added.

True North Sweetens Deal

The most advanced of Kinross' portfolio of gold exploration projects is the True North deposit, acquired more than a year ago in a deal with Newmont Exploration.

Through its corporate acquisition of LaTeko Resources about two years ago, Kinross already owned a 35 percent share in the 10,000-acre property, located on the southwest flank of Pedro Dome about 10 miles from Fort Knox.

After closing the deal with Newmont, Kinross aggressively stepped up exploration drilling work on True North. This year alone, the company spent about $3 million on the project, and has identified about 460,000 ounces of gold in two of four known mineralized zones.

The company also submitted for state and federal agency...